Marxâs Revenge

After 150 years since its publication, CAPITAL still has the power to frighten the capitalist class and its economic apologists, particularly when capitalism enters an economic crisis and trade depression. During the last economic crisis of 2008 an ashen-faced President Nicholas Sarkozy was seen clutching tightly a copy of CAPITAL as he flew out to an economic conference to discuss an event that mainstream economists had claimed would never occur again (EVENING STANDARD March 30th 2009).

Following the collapse of the Berlin Wall, Marx and his works were written off as having no application to the 21st century. His critics were wrong. Mainstream economists were unable to anticipate or explain the economic crisis of 2008 reality to worried politicians who had been told that âthe new normalâ was a crisis-free economy with constant and rising growth. As a consequence of the failure of main-stream economics, there was a marked revival in the sales of CAPITAL.

Capitalismâs apologists did not like the ârediscoveryâ of Marx and his revolutionary conclusion that the working class must replace capitalism with socialism. In the same edition of the EVENING STANDARD, Emma Duncan, deputy editor of the ECONOMIST, said of the revival of Marx and CAPITAL:

Marx, in other words, is fashionable in a way that he hasn't been since the 1930s, when news of the horrible reality of the regime that his ideas had engendered began to seep out of the Soviet Union. One reason Marx is getting a second hearing is that he said that capitalism would be racked by crises. To those who thought that boom and bust had been banished, history had come to an end, and we could therefore put our feet up and enjoy the benefits of democracy and the profits of capitalism, along with a nice cup of tea, this might make him sound like a prophet for our times. But the idea that this revelation is unique to Marx is daft. All of history's serious economists understood that the Â¬economic system is unstable, and that crises are consequently to be expected.

Who were these âserious economistsâ who believed capitalism was inherently unstable? Going right back to J.B Say, economists believed that every seller bought a buyer to the market. They still do. The problem is never capitalism per se that is the problem but the confidence of consumers and investors, governments, greedy workers, sun spots, and aliens. Anything and everything accept the contradictions at the heart of commodity production and exchange for profit. And it was Lord Keynes and Milton Friedman who thought the implementation of their own pet economic theories would prevent economic crises from ever occurring again. These two economists, lest we forget, were once championed by the ECONOMIST.

During the last economic crisis of 2008 the then Chairman of the Federal Reserve, Alan Greenspan was forced to recant his rosy-eyed view of the economy and admit that he was wrong to believe that capitalism was a smooth, crisis-free system amenable to fine-tuning from economists and financiers. And who were the economists and financiers advising the Prime Minister, Mr Brown and telling him that there would be no more âboom and bustâ? Ms Duncan conveniently gives no names to save their embarrassment.

And Marx did not ârevealâ the instability of capitalism like some theologian or soothsayer. Instead he scientifically explained why capitalism passes through periodic economic crises and trade depressions. Economic crises were a demonstrable fact even in Marxâs own day, rather than the utopian picture of a harmonious and self-adjusting capitalism found in the pages of Adam Smithâs WEALTH OF NATIONS. Marx explained the instability and contradictions of commodity production and exchange for profit and the reasons for economic crises and trade depressions. He showed that the trade cycle was a result of the structure of capitalism itself. Crises arise from the contradictions acting on commodity production and exchange for profit. There are times when sellers of commodities cannot find buyers causing gluts in certain markets, falling profits, stock-piling, plant closures, bankruptcy and a rise in unemployment. Marx got the trade cycle right and the economists got it wrong.

Nor is Marx a âprophet for our timesâ. Although Marx was foremost a socialist revolutionary he was also a social scientist. Anyone who wants to understand capitalism should read Capital. Superficially, the book looks difficult, but if the reader persists then they would learn why history has not come to an end, why capitalism is not the final social system in human history, and why the capitalists will not let the working class âput their feet up and have a cup of teaâ, as Ms Duncan condescendingly puts it.

The greatest fear CAPITAL presents to the capitalist class and its political agents is that it shows that we do not live in the best of all possible worlds. There is an alternative to capitalism. There is an alternative to buying and selling, money, markets, the wages system and class exploitation. That alternative is socialism - the common ownership and democratic control of the means of production and distribution by all of society. Not a social system subject to âhistorical inevitabilityâ but subject, instead, to the conscious, democratic and political formation of a world-wide socialist majority. Under such political conditions socialism is only a revolution away.